FUBU Founder Daymond John's $5 Million Lesson

You've already got millions in sales and LL Cool J on the team. What could go wrong?

The way that Daymond John made his way into hip-hop—and entrepreneurship—is worth repeating: Growing up in Queens, NY, he knew that he wanted to be part of the scene. So he'd go on tour with LL Cool J and "grab sandwiches" for him and Salt-n-Pepa and other artists that were getting big out of the borough. Then he had an idea: What if he gave them shirts?

Soon FUBU would be born. And awesome, '90s-minimalist commercials would be made.

He placed his shirts with the right artists in the right videos and thus got the right promotion—though the ride was just beginning.

"People thought I was this huge company," he says, "when I was a waiter at Red Lobster with 10 T-shirts in my basement."

Then the boom came: By 1998, when the clothing company reached its peak, sales were over $350 million. But that kind of success can go to your head, John says, and the company made some ill-advised moves, like making a record.

Which didn't turn out that well:

"We thought we were cool because FUBU was super fiery hot and we understood a lifestyle and we thought that naturally we could go out and make an album and we did ... not just us singing but we already dressed all the artists and we already knew all the artists and half the video sets, so creatively we understood it, but we didn't know the business behind it."

Daymond John

A record that didn't get the best reviews. And though they sold half a million units of the album, John says, it cost them $5 million to make.

"We didn't know our numbers, we didn't look at our numbers, we were spending money like drunken sailors, we were getting caught up," he says. "What was the reason we were doing it? Did we get exposure? Yes, but from the business model, we died."

That's a good mistake if we've ever heard one.

[Image: Flickr user Marc Flores]

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